Bitcoin Prices Dip as Inflation Data Prompts High US Interest Rate Predictions
Summary:
Following the US macro data revealing an inflation increase, Bitcoin's price experienced a swift decline, from its peak to $71,200. The February US Producer Price Index (PPI) further aggravated this situation by outdoing expectations and emphasizing the persistent nature of high inflation. As a result, experts predict that the Federal Reserve may maintain elevated interest rates for a longer period. Despite these trends, analysts suggest that typical volatility around record high prices needs time to settle before a clear trend can emerge.
On March 14, Bitcoin (BTC) took a downward turn as Wall Street opened, influenced by new US data on inflation. In just a few hours, BTC decreased abruptly from record heights to $71,200, according to data from Cointelegraph Markets Pro and TradingView. Despite no significant price rebound at the time of reporting, BTC remained slightly buoyant, with only a 3.3% overall loss for the day.
The leaps in the US Producer Price Index (PPI) readings for February, outstripping predictions, contributed to this trend, highlighting the continued high inflation rate. The PPI findings echo and amplify concerns arising from recent data on unemployment claims and the two-days-previous release of the Consumer Price Index (CPI). All these indicators suggest challenges awaiting the Federal Reserve.
Financial analyst Tedtalksmacro commented on X (the platform previously known as Twitter) that, given this data, the Federal Reserve would likely maintain increased interest rates for an extended period. The upcoming Federal Open Market Committee (FOMC) gathering on March 20 was already expected to pass without any reduction in interest rates.
Notwithstanding these observations, Tedtalksmacro also acknowledged that the current market situation is likely predominantly influenced by institutional liquidity and regulatory clarity on cryptocurrencies. The odds of a rate cut at the upcoming FOMC session in May were reported by the CME Group's FedWatch Tool as just 6.2% at the time of reporting.
In a broader BTC price context, trader and analyst Rekt Capital remained sanguine. He suggested that price volatility occurred naturally at record highs and that such fluctuations needed to phase out before a clear trend could reestablish itself.
On a more immediate note, fellow analyst Jelle suggested that the BTC price tended to recover strength during the later stages of US trading hours, after an initial dip upon opening. Trader Daan Crypto Trades also observed that major price shifts for Bitcoin, particularly the recent dramatic drops, tended to occur in conjunction with the US market opening and the start of ETF trading, whereas Asian trading sessions often saw a recovery from such drops.
Published At
3/14/2024 6:23:50 PM
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